iWatch and the difference between Apple businesses and hobbies

There's been a lot of media attention focused on the idea of an Apple iWatch lately. Given the nature of the stories, and the prominence of the new outlets fueling them, it feels like something is leaking, intentionally or otherwise. That said, unless and until Apple shows something new off on stage, it's impossible to predict exactly what they're going to do, and how they're going to position it. Before Steve Jobs held up the original iPhone, after all, many expected nothing more than an iPod classic with a click wheel. The same will likely prove true with an iWatch -- difficult to predict yet seemingly obvious in hindsight.

Yet for all their secrecy, Apple is a fairly consistent company. They don't make crap, and they don't release products that aren't carefully targeted. Everyone from irrational Wall Street analysts and investors to ennui-ed tech journos might already be playing out the holy grail, part 2, in their heads:

"A tiny-screen iPod with touch controls. A revolutionary smart watch. A breakthrough natural language communicator. An iPod, a watch, and a communicator. Are you getting it? This is one device...

"And we're calling it iWatch."

But what are the realities?

To date, Apple has released two kinds of iOS devices: full-on businesses, and hobbies that test potential future businesses but mainly serve to add value to current businesses. The iPhone and iPad are both full-on businesses. They sell in the hundreds of millions, earn in the billions, and even removed from Apple they'd be large and valuable companies in their own right. The Apple TV is a hobby. It sells in the low millions, earns in the millions, and while growing, is currently little more than a rounding error in Apple's profits column.

Apple's businesses have entire ecosystems built around them. They run a huge library of apps and support an incredible array of accessories. Apple's hobbies are fortified by channel partnerships rather than SDKs and APIs, and boast no accessories beyond the cables required to use them.

At first blush, an iWatch-type device feels less like a full-on, iPhone- or iPad-sized business, and more like an Apple TV-style hobby. Given the constraints of size, and what that means for screen interface, battery, radio, and more, the imposed feature set makes it seem more likely Apple would position it as yet another way to add value to their existing iOS devices, rather than as an equal-level iOS device in its own right.

You can't get all the functionality of an iPhone on your wrist without strapping something the size of an iPhone to your wrist. You can't get Siri and iCloud, Maps and iTunes in the Cloud, and everything else that requires an Apple A6 processor, Retina display, LTE, GPS, and Bluetooth 4.0 radios, and more, without the space to pack it all in.

What that leaves us with, as many have predicted, is a peripheral, a concentrated window that gets content pushed and streamed to it, much like an Apple TV, but can also be used to push queries and commands back, unlike the current Apple TV. Something that has channel partners like an Apple TV, but more Nike than HBO, geared more towards extreme mobility than static entertainment. And I imagine the opportunity for accessories could be exponentially larger than the Apple TV.

As a hobby, however, and given how many people have already eschewed watches for convergence devices that include watch-like functionality, namely iPhones and other smart phones, that potential market may not seem overly large. Sure, the idea of elegant, Jony Ive designed, black-and-slate and white-and-silver ultra-thin, ultra-precise time pieces might lure some back, but how many and for how long?

With anything less capable than an iPhone, the business opportunity will be less than an iPhone. At least at first.

Like with the Apple TV, wearable technology may start as a hobby for Apple, but also as an area of intense interest. The early embodiment of ideas they have, it might be a similar string they pull to see where it takes them.

Technology and market realities aside, for anything iPhone- or iPad-like, Apple would have to have an iPhone- or iPad-level use case to make. In 2007 Steve Jobs showed why a full-screen, multitouch device with a compelling user experience instantly obsoleted the resistive, stylus- and keyboard-driven not-very smartphones of its time. In 2010, Jobs made a case for how the iPad was significantly better at specific set of things than either a smartphone or a laptop. A watch or similar class iOS device would have to likewise obsolete, or provide a compelling use-case for it to be considered an independent and important device in its own right.

A hobby, on the other hand, just needs a good hook, be it "HD iTunes content and more on your TV" or "Everything important on your wrist."

Which is not a disparagement in the least. The Apple TV is a terrific device that works well enough on its own, but also provides significant additional value to iPhone and iPad owners. Years ago, Apple managed to cram rudimentary voice features into the nearly buttonless iPod shuffle. Tomorrow, who knows what they could accomplish with natural language and small-screen multitouch controls, much less with fast, just-in-time connectivity to an iPhone or iPad.

Apple's not done with their quest to push computing to ever-broader numbers and kinds of people, and types of use. Just like Apple IIs were easier to use and more accessible than what came before, and Macs after them, and iPads after them, there will be something next. There will be people for whom even a tablet is too much computer, and a TV or living room box, or a watch or wearable pod is far more appropriate and appealing. And even if, given limited interface considerations or screen sizes, portability or component space, neither is ever as powerful as full-on iOS devices, they could still be every bit as empowering.

Either way, we'll only know Apple's iWatch plans for certain when, and if, they hold one up on stage.

(I spoke about a lot of this on the iMore show, and Leo Laporte, Andy Ihnatko, Don McAlister and I discussed it extensively on MacBreak Weekly earlier in the week, so check those out for more.)

Reader comments

iWatch and the difference between Apple businesses and hobbies

Good read ... Thanks Rene though I think the iWatch will be released as a one more thi alongside the iPhone 5s or what ever it will be called , this year will be very interesting year for Apple either a miss or a home run with planned iWatch or an Apple TV / display hd maybe, 4k retina maybe, smart tv with iOS capabilities maybe..... Who knows apple will surprise and it needs to do it this year.

It seems calling things a "hobby" is used as a disclaimer when they don't expect things to sell as phenomenally well as their iPhone and iPad lines.

Given the madness around Apple's share price recently, it doesn't surprise me that they need to be careful not to raise expectations unrealistically, and I think failing occasionally is a vital part of doing anything groundbreaking.

As the proud owner of a Pebble, which is hampered by issues with notifications at the moment, I would love to see what full integration with iOS devices could bring.

I don't know if you're joking or not,
But if you've ever worn the Ipod nano as a watch it *feels* like it should do that.

it's small enough that it's inconspicuous, but big enough that if you could even just facetime through it that would be awesome. Then again, who would pay for the wireless service on a watch and if it was on wifi it's almost too limiting... Maybe walkie talking / push to talk? I'm just hoping for something more futuristic than : http://www.thedesigntown.com/new_product_images/watch-walkie-l.jpg

No messaging, no voice/video call; third person can hear everything. If they plan to release it with wireless headphones, then people would stop buying iPods and iPhones. It might have meeting reminder which might vibrate the watch. :P. May be the functionality of nike band. And yeah not to forget the touch screen..

Probably they will release the 'cheaper' Iphone as an iWatch.
So this will be a fully functional Iphone with a small screen. Or maybe it will have a bigger screen than we think of now.
( can a 4" screen be wrapped around someones wrist?)
And maybe you can connect an ipod, ipad (mini) to make also phonecalls with those devices or at least use their apps.
They will have to solve some battery issues first though to make this happen.

Nice article. I was wondering - is there another example of an Apple business that is a 'hobby' except the Apple TV? It seems to me it is an exception in the way Apple operates, so how likely is it that they launch another one?

I don't see it. Apple devices are content driven and content is used to drive hardware sales. What content are you going to purchase for an iWatch? This is just stock manipulation which doesn't seem to be covered by any of the Apple sites (I guess only when the stock goes down there is a conspiracy).

re: "The Apple TV is a hobby. It sells in the low millions, earns in the millions..."

The iPod was like a hobby too, at first. iPod eventually made more money than Apple's existing Mac business, but that took years. From 2001 to 2004, iPod sales gradually ramped up from a few hundred thousand to 2 million / quarter. In 2005 sales more than doubled to 5 million / quarter, and maxed out at about 10 million / quarter in 2008 (not including huge sales spikes during the holiday quarters, of course.)

I think Apple's "hobbies" are simply businesses that haven't reached an inflection point yet. The point after which adding money to development + marketing will generate proportionally higher sales + profits. I don't think Apple TV is there yet, for example. Adding bells and whistles and buying more air time for Apple TV ads probably won't boost sales much.

Maybe the same thing would happen with an Apple-branded smartwatch. In 2013, anyway. At best, given 2013 Apple technology, it would act as a second screen (and maybe a Siri mic) for your iPhone / iPad / iPod touch. At worst, it would be this year's "pet rock," and sales would fizzle after the novelty wore off. (After killing off Pebble and all those other Kickstarter smartwatch prototypes.)

Of course, at some point in the future, the electronics required for a device with iPhone-like features will be small enough to fit into a watch. iPhone would keep the same old screen size, and could be very, very thin (assuming improved efficiency in all components.) But shrinking an iPhone down to a wearable size could create a whole new product category.

Maybe between now and that watch-sized-iOS-device future, Apple could experiment with an interim device. So what Apple device has a smaller screen than iPhone? Bingo. The iPod nano. Apple has shown that they're not afraid to try radical form factor experiments with the iPod nano.

Maybe Apple could experiment with a miniaturized version of iOS on the iPod nano first, then after they've tested, refined, and iterated, they could release a watch-sized iOS device using what they learned.

I really hope the iWatch comes to life! I've been wanting one ever since I first saw the concept. I've looked at the Pebble watch & Cookoo watch but thought they were eh. I know an Apple iWatch would be amazing just like iPad & iPhone are & definitely worth the wait!

I don't see this overtaking the iPhone in any means. I think it will be an accessory for iPhone, iPod Touch, and iPad. I think it will most likely be a Bluetooth capable device that does the basic tasks of the iOS devices. It will probably be able to make and receive phone calls, texts and maybe video calls also. It will probably be able to have storage for music, maybe a GPS and maps, and other things. I don't see it containing full blown apps and games.